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Q: The company's stock has dropped pretty dramatically over the past year. What are you telling investors to reassure them about the company's prospects? A: If you look at our individual businesses, the pieces are worth more than the whole. There's MatchLogic. The Excite portal business is worth something. Lycos is at $7 billion or $8 billion. You don't have a hard time getting to $10 billion or $11 billion adding up the sum of the parts. At some point, you hit bottom. Q: Wall Street also seems worried about the expiration of Excite@Home's exclusive right to sell Net access over cable networks. A: What the Street doesn't like is uncertainty. But it's important to remember something: There's not another company anyplace that has an exclusive distribution with anybody. The Street is unable to look at [Excite@Home's exclusive deals] as a positive. It's just hard to write a business plan on this company beyond 2002. We're sort of being hung by a dynamic of our own making. And the international operations are a big positive. Thirteen million out of 72 million [homes passed by Excite@Home cable systems] are out of the U.S. -- and those carry seven-year exclusives. And the [seven-year periods] don't start until the 1,000th subscriber is signed up. The fastest-growing segment of our footprint is overseas. By definition, most of the new growth is going to come outside of the U.S. That means that every quarter that goes by, our dependency on [the U.S. cable companies] decreases. Q: Some analysts fear that exclusivity in the U.S. may end even before 2002, perhaps because of regulatory pressure. What are the chances of that happening? A: I think there's a very low possibility of that happening -- if any. [Federal Communications Commission Chairman William] Kennard is happy about how things are. If [the political climate changes], it's not going to happen before the election. That means that probably nothing can happen until two years from now anyway. Q: Will you extend your contracts with the cable companies so Excite@Home can sell Net access after 2002 -- even if that's not exclusive? A: I fully expect that we will extend our agreements with them. I expect that we'll have some sort of MFN [most favored nation] agreement with them. Q: How will you boost the number of your subscribers for broadband Net access? A: Mostly, we've been co-marketing with our cable partners. We stuff things into bills or advertising. Now with Excite, we're targeting more online advertising. We're using the Web in a much more aggressive way to drive signups. We'll also have more retail-based marketing. That will largely be when you buy a computer. The [cable modems that customers can install themselves] are on their way. That will largely come out this Christmas season. When you get the consumer doing his own installation, that's not heavy lifting. Q: What are the big attractions of the broadband portal you're launching Mar. 28? A: Any Excite user will be able to port over all their bookmarks. Excite will be the default page for @Home users -- and most users keep the Excite start page. Also, you can get seven e-mail addresses. You can link up five computers in one home. And you get 70 megabytes of storage compared with 15 megabytes before. Q: Do you feel like you need to combine with a big content company now that America Online is acquiring Time Warner? A: We're not big believers in owning proprietary content. I have Peter Jennings, and you have Tom Brokaw. I don't think the Time Warner deal was about content. AOL could have bought Disney. The math doesn't add up. What they bought was a cable platform. They finally have a place to send these 21 million users in the broadband world. I think the centerpiece of that acquisition was the high-speed platform. And I think that was smart. We would do to AOL what AOL did to the other ISPs. Q: So you don't need to acquire more content? A: We really still are focused on aggregation. We don't feel like we need to own that content. We're not going to go out and buy iVillage. We buy functionality. We basically license content. I don't think we'll shift from that. Q: You have said that you will offer Internet access using DSL [digital subscriber lines] provided over telephone lines. How will you do that? A: At the end of the day, we're indifferent about which technology becomes superior. We can launch DSL outside of our cable partners' territories anytime we want. Q: And you can offer DSL within the territories of your cable partners after exclusivity expires? A: Anybody will be able to do anything to anybody. Q: Much has been made of how your relationship with AT&T has deteriorated. How is it now? A: At the top of the company, it's fine. When you go deeper in the company, you negotiate every little detail. I actually think the relationships are in good shape. Q: Do you think AT&T is more comfortable now with Excite@Home moving into the content business? A: I think the central piece is what does AT&T want to do? Does it want to be a pipe company, or does it want to be a services company? Only AT&T can answer that question. That continues to be a central point of discussion for all of us. AT&T's genetic makeup is as a network company. There are some who believe that's what God put them on this Earth to do. But there are other people who see the value of the strategy we're pursuing. [Their decision] will color what we do and how we respond to them. Elstrom is an Associate Editor for Business Week in New York |
